The Euro (EUR) advanced against the US Dollar (USD) but was under pressure against the Pound (GBP) on Monday as the markets settled down following last week’s panic.

Sentiment towards the Euro remains negative as concerns over the health of the Eurozone economy continues to spook investors.

Data released early in the session showed that Producer Price Inflation declined by 1% in September, adding to the 0.9% fall recorded in the preceding month.

On a month on month basis German PPI remained stagnant at 0%. The report did little to ease fears over low inflation.

Consumer Confidence in the Netherlands also slipped to a reading of -7 from the -6 recorded in the previous month.

The Eurozone Current Account Surplus also fell sharply. The surplus narrowed from the €32.8 billion recorded in July to €15.1 billion in August.

The data highlights the impact the slowdown across the region has had on trade.

US Dollar Falls on Fed Speculation

The US Dollar fell against the Euro to add to the currency’s biggest weekly decline since April as traders speculate over when the Federal Reserve will decide to raise interest rates.

The ‘Greenback’ had managed to rally from last week’s lows on the back of positive jobs data but comments made by the Federal Reserve President of Dallas Richard Fisher weighed upon the currency. He said that he continues to support the ending of the Feds monthly bond-buying programme and said that he sees no reason why the Central Bank should not raise interest rates by spring next year.

‘You’re getting into this point where accounts and market environment are getting confused by conflicting statements. The desire to lighten a position is stronger than the desire to add to risk,’ an economist from Citigroup Inc.

Pound Sterling Gains on Domestic Data

The Pound Sterling managed to make gains against the Euro after it continued to find support from positive domestic data released at the weekend.

A Consumer Confidence report compiled by accountancy firm Deloitte showed that sentiment amongst British shoppers climbed to a three year high as a strong jobs market and low inflation increased confidence in the economy.

‘An improving jobs market and lower inflation has been a real tonic for UK consumers. With inflation on a declining path and earnings heading up, the scene is set for a recovery in real incomes around the turn of the year,’ said Deloitte chief economist Ian Stewart.

A separate report showed that house prices also rose strongly from August to October.

Tuesday promises to be another quiet session for the Euro due to a lack of domestic economic data releases.